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Why This Tech Bubble is Worse Than the Tech Bubble of 2000

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Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#21

Post by imjk »

karmacondon wrote: post #9

This is why most angels have to be accredited investors, meaning that they need to have $1MM in assets. Millionaires investing in new ideas aren't exactly naive widows and orphans (though they could be). With public stocks there is indeed high liquidity, but there was also strikingly high volatility during the tech bubble. It's good to be able to sell your shares, but less so if the price can drop 80% in a day. That'…

Well he explicitly mentions equity crowd funding which allows people to bypass those rules. Also, from personal experience as an angel investor, there isn't really a great authority out there enforcing accredited investor requirements. All the times I've invested in private companies, I simply had to sign a one-page document self-proclaiming myself as an accredited investor.

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#22

Post by joshu »

calcsam wrote: post #17

Some investors spin doom and gloom as an excuse to lowball entrepreneurs they're offering to invest in. Shark Tank is a pretty good example of this, even if Cuban's not the worst offender on there.

That show drives me nuts. They take WAY too much equity unless they are doing heavy lifting (that is to say, as much as the extant founders.)

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#23

Post by sixQuarks »

I think Cuban is wrong. It's WORSE when ordinary investors are risking their money. Today, you've got angels and VCs that have risked their money. And this is money they don't need. Big deal if everything implodes, what do they lose? Simply their bets. Back in 2000s, a lot of ordinary people lost money they couldn't afford to lose.

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#25

Post by tosseraccount »

karmacondon wrote: post #9

This is why most angels have to be accredited investors, meaning that they need to have $1MM in assets. Millionaires investing in new ideas aren't exactly naive widows and orphans (though they could be). With public stocks there is indeed high liquidity, but there was also strikingly high volatility during the tech bubble. It's good to be able to sell your shares, but less so if the price can drop 80% in a day. That'…

accredited investors?

Who accredits investors?

Is there legal status for this?

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#26

Post by hristov »

weeksie wrote: post #2

"All those widows and orphans" Spare me. What are the numbers on those widows and orphans? Because the thing is, tech investment right now is driven by investors and funds—entities that by definition should be able to handle their losses. Entities that by definition are more educated about the downside risk than the tons of John Q Public idiots that were day trading Internet stocks back in 2000. Maybe the numbers sup…

You are absolutely right. I don't know what widows and orphans he is talking about, but it is very unlikely that anyone of the people pushing hundreds of millions of dollars into start-ups today has any problem affording repairs on their cars.

He is making up a victim here.

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#27

Post by cookingrobot »

CatDevURandom wrote: post #14

Heaven forbid you read the comments section before the actual article. His point: >The bubble today comes from private investors who are investing in apps and small tech companies. ... >Why ? Because there is ZERO liquidity for any of those investments. None. Zero. Zip. Is he wrong?

I think he's wrong.

Because these are private investments without liquidity, that has prevented a bubble. You don't have people investing just to ride a rising wave and make profits from day trading. Investors this time have to actually look at the chances of the companies themselves, because they're only going to get a payday if the company is wildly successful, and nothing otherwise. If things start to slowdown, there probably won't be a sudden crash, because there's nothing to crash. These companies have ambiguous valuations, and there's no way to cash out, so there can't be a race to be the first to sell.

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#28

Post by adventured »

tosseraccount wrote: post #25
karmacondon wrote: post #9

This is why most angels have to be accredited investors, meaning that they need to have $1MM in assets. Millionaires investing in new ideas aren't exactly naive widows and orphans (though they could be). With public stocks there is indeed high liquidity, but there was also strikingly high volatility during the tech bubble. It's good to be able to sell your shares, but less so if the price can drop 80% in a day. That'…

accredited investors? Who accredits investors? Is there legal status for this?

Yes. It varies by country of course.

"In the United States, for an individual to be considered an accredited investor, they must have a net worth of at least one million US dollars, not including the value of their primary residence or have income at least $200,000 each year for the last two years (or $300,000 together with their spouse if married) and have the expectation to make the same amount this year.""

http://en.wikipedia.org/wiki/Accredited_investor#United_Stat...

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#29

Post by damoncali »

ghshephard wrote: post #7
encoderer wrote: post #4

> Broadcast.com, AOL, Netscape, etc. Today its, Uber, Twitter, Facebook Even mentioning his company in the same breath as Uber, Twitter and Facebook shows how out of touch he is IMO. Broadcast.com was hardly a business! Those companies have BILLIONS of dollars of real revenue.

I'd never heard of Broadcast.com before this post. Checking http://en.wikipedia.org/wiki/Broadcast.com , I see that "In April 1999, Yahoo! acquired the company for $5.7 billion (or over $10,000 per user) in stock and renamed it Yahoo! Broadcast Solutions. The company had 570,000 users. " I"m comfortable calling that a Bubble.

My God I feel old.

Re: Why This Tech Bubble is Worse Than the Tech Bubble of 2000

#30

Post by cookingrobot »

tosseraccount wrote: post #25
karmacondon wrote: post #9

This is why most angels have to be accredited investors, meaning that they need to have $1MM in assets. Millionaires investing in new ideas aren't exactly naive widows and orphans (though they could be). With public stocks there is indeed high liquidity, but there was also strikingly high volatility during the tech bubble. It's good to be able to sell your shares, but less so if the price can drop 80% in a day. That'…

accredited investors? Who accredits investors? Is there legal status for this?

In the US it's anyone who:

-- earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR

-- has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).

http://www.investor.gov/news-alerts/investor-bulletins/inves...

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